Ignoring the Perfect Storm

Krugman:

Before 9/11 the Federal Emergency Management Agency listed the three most likely catastrophic disasters facing America: a terrorist attack on New York, a major earthquake in San Francisco and a hurricane strike on New Orleans. "The New Orleans hurricane scenario," The Houston Chronicle wrote in December 2001, "may be the deadliest of all." It described a potential catastrophe very much like the one now happening.

So why were New Orleans and the nation so unprepared? After 9/11, hard questions were deferred in the name of national unity, then buried under a thick coat of whitewash. This time, we need accountability.

First question: Why have aid and security taken so long to arrive? Katrina hit five days ago - and it was already clear by last Friday that Katrina could do immense damage along the Gulf Coast. Yet the response you'd expect from an advanced country never happened. Thousands of Americans are dead or dying, not because they refused to evacuate, but because they were too poor or too sick to get out without help - and help wasn't provided. Many have yet to receive any help at all.

There will and should be many questions about the response of state and local governments; in particular, couldn't they have done more to help the poor and sick escape? But the evidence points, above all, to a stunning lack of both preparation and urgency in the federal government's response.

Even military resources in the right place weren't ordered into action. "On Wednesday," said an editorial in The Sun Herald in Biloxi, Miss., "reporters listening to horrific stories of death and survival at the Biloxi Junior High School shelter looked north across Irish Hill Road and saw Air Force personnel playing basketball and performing calisthenics. Playing basketball and performing calisthenics!"

Maybe administration officials believed that the local National Guard could keep order and deliver relief. But many members of the National Guard and much of its equipment - including high-water vehicles - are in Iraq. "The National Guard needs that equipment back home to support the homeland security mission," a Louisiana Guard officer told reporters several weeks ago.

Second question: Why wasn't more preventive action taken? After 2003 the Army Corps of Engineers sharply slowed its flood-control work, including work on sinking levees. "The corps," an Editor and Publisher article says, citing a series of articles in The Times-Picayune in New Orleans, "never tried to hide the fact that the spending pressures of the war in Iraq, as well as homeland security - coming at the same time as federal tax cuts - was the reason for the strain."

In 2002 the corps' chief resigned, reportedly under threat of being fired, after he criticized the administration's proposed cuts in the corps' budget, including flood-control spending.

Third question: Did the Bush administration destroy FEMA's effectiveness? The administration has, by all accounts, treated the emergency management agency like an unwanted stepchild, leading to a mass exodus of experienced professionals.

Last year James Lee Witt, who won bipartisan praise for his leadership of the agency during the Clinton years, said at a Congressional hearing: "I am extremely concerned that the ability of our nation to prepare for and respond to disasters has been sharply eroded. I hear from emergency managers, local and state leaders, and first responders nearly every day that the FEMA they knew and worked well with has now disappeared."

I don't think this is a simple tale of incompetence. The reason the military wasn't rushed in to help along the Gulf Coast is, I believe, the same reason nothing was done to stop looting after the fall of Baghdad. Flood control was neglected for the same reason our troops in Iraq didn't get adequate armor.

At a fundamental level, I'd argue, our current leaders just aren't serious about some of the essential functions of government. They like waging war, but they don't like providing security, rescuing those in need or spending on preventive measures. And they never, ever ask for shared sacrifice.

Yesterday Mr. Bush made an utterly fantastic claim: that nobody expected the breach of the levees. In fact, there had been repeated warnings about exactly that risk.

So America, once famous for its can-do attitude, now has a can't-do government that makes excuses instead of doing its job. And while it makes those excuses, Americans are dying.

Dowd:

Stuff happens.

And when you combine limited government with incompetent government, lethal stuff happens.

America is once more plunged into a snake pit of anarchy, death, looting, raping, marauding thugs, suffering innocents, a shattered infrastructure, a gutted police force, insufficient troop levels and criminally negligent government planning. But this time it's happening in America.

W. drove his budget-cutting Chevy to the levee, and it wasn't dry. Bye, bye, American lives. "I don't think anyone anticipated the breach of the levees," he told Diane Sawyer.

Shirt-sleeves rolled up, W. finally landed in Hell yesterday and chuckled about his wild boozing days in "the great city" of N'Awlins. He was clearly moved. "You know, I'm going to fly out of here in a minute," he said on the runway at the New Orleans International Airport, "but I want you to know that I'm not going to forget what I've seen." Out of the cameras' range, and avoided by W., was a convoy of thousands of sick and dying people, some sprawled on the floor or dumped on baggage carousels at a makeshift M*A*S*H unit inside the terminal.

Why does this self-styled "can do" president always lapse into such lame "who could have known?" excuses.

Who on earth could have known that Osama bin Laden wanted to attack us by flying planes into buildings? Any official who bothered to read the trellis of pre-9/11 intelligence briefs.

Who on earth could have known that an American invasion of Iraq would spawn a brutal insurgency, terrorist recruiting boom and possible civil war? Any official who bothered to read the C.I.A.'s prewar reports.

Who on earth could have known that New Orleans's sinking levees were at risk from a strong hurricane? Anybody who bothered to read the endless warnings over the years about the Big Easy's uneasy fishbowl.

In June 2004, Walter Maestri, emergency management chief for Jefferson Parish, fretted to The Times-Picayune in New Orleans: "It appears that the money has been moved in the president's budget to handle homeland security and the war in Iraq, and I suppose that's the price we pay. Nobody locally is happy that the levees can't be finished, and we are doing everything we can to make the case that this is a security issue for us."

Not only was the money depleted by the Bush folly in Iraq; 30 percent of the National Guard and about half its equipment are in Iraq.

Ron Fournier of The Associated Press reported that the Army Corps of Engineers asked for $105 million for hurricane and flood programs in New Orleans last year. The White House carved it to about $40 million. But President Bush and Congress agreed to a $286.4 billion pork-filled highway bill with 6,000 pet projects, including a $231 million bridge for a small, uninhabited Alaskan island.

Just last year, Federal Emergency Management Agency officials practiced how they would respond to a fake hurricane that caused floods and stranded New Orleans residents. Imagine the feeble FEMA's response to Katrina if they had not prepared.

Michael Brown, the blithering idiot in charge of FEMA - a job he trained for by running something called the International Arabian Horse Association - admitted he didn't know until Thursday that there were 15,000 desperate, dehydrated, hungry, angry, dying victims of Katrina in the New Orleans Convention Center.

Was he sacked instantly? No, our tone-deaf president hailed him in Mobile, Ala., yesterday: "Brownie, you're doing a heck of a job."

It would be one thing if President Bush and his inner circle - Dick Cheney was vacationing in Wyoming; Condi Rice was shoe shopping at Ferragamo's on Fifth Avenue and attended "Spamalot" before bloggers chased her back to Washington; and Andy Card was off in Maine - lacked empathy but could get the job done. But it is a chilling lack of empathy combined with a stunning lack of efficiency that could make this administration implode.

When the president and vice president rashly shook off our allies and our respect for international law to pursue a war built on lies, when they sanctioned torture, they shook the faith of the world in American ideals.

When they were deaf for so long to the horrific misery and cries for help of the victims in New Orleans - most of them poor and black, like those stuck at the back of the evacuation line yesterday while 700 guests and employees of the Hyatt Hotel were bused out first - they shook the faith of all Americans in American ideals. And made us ashamed.

Who are we if we can't take care of our own?

And last but certainly not least, Rich, truncated here because he justs keeps on frying them:

As the levees cracked open and ushered hell into New Orleans on Tuesday, President Bush once again chose to fly away from Washington, not toward it, while disaster struck. We can all enumerate the many differences between a natural catastrophe and a terrorist attack. But character doesn't change: it is immutable, and it is destiny.

As always, the president's first priority, the one that sped him from Crawford toward California, was saving himself: he had to combat the flood of record-low poll numbers that was as uncontrollable as the surging of Lake Pontchartrain. It was time, therefore, for another disingenuous pep talk, in which he would exploit the cataclysm that defined his first term, 9/11, even at the price of failing to recognize the emerging fiasco likely to engulf Term 2.

After dispatching Katrina with a few sentences of sanctimonious boilerplate ("our hearts and prayers are with our fellow citizens"), he turned to his more important task. The war in Iraq is World War II. George W. Bush is F.D.R. And anyone who refuses to stay his course is soft on terrorism and guilty of a pre-9/11 "mind-set of isolation and retreat." Yet even as Mr. Bush promised "victory" (a word used nine times in this speech on Tuesday), he was standing at the totemic scene of his failure. It was along this same San Diego coastline that he declared "Mission Accomplished" in Iraq on the aircraft carrier Abraham Lincoln more than two years ago. For this return engagement, The Washington Post reported, the president's stage managers made sure he was positioned so that another hulking aircraft carrier nearby would stay off-camera, lest anyone be reminded of that premature end of "major combat operations."

This administration would like us to forget a lot, starting with the simple fact that next Sunday is the fourth anniversary of the day we were attacked by Al Qaeda, not Iraq. Even before Katrina took command of the news, Sept. 11, 2005, was destined to be a half-forgotten occasion, distorted and sullied by a grotesquely inappropriate Pentagon-sponsored country music jamboree on the Mall. But hard as it is to reflect upon so much sorrow at once, we cannot allow ourselves to forget the real history surrounding 9/11; it is the Rosetta stone for what is happening now. If we are to pull ourselves out of the disasters of Katrina and Iraq alike, we must live in the real world, not the fantasyland of the administration's faith-based propaganda. Everything connects.

Though history is supposed to occur first as tragedy, then as farce, even at this early stage we can see that tragedy is being repeated once more as tragedy. From the president's administration's inattention to threats before 9/11 to his disappearing act on the day itself to the reckless blundering in the ill-planned war of choice that was 9/11's bastard offspring, Katrina is déjà vu with a vengeance.

The president's declaration that "I don't think anyone anticipated the breach of the levees" has instantly achieved the notoriety of Condoleezza Rice's "I don't think anybody could have predicted that these people would take an airplane and slam it into the World Trade Center." The administration's complete obliviousness to the possibilities for energy failures, food and water deprivation, and civil disorder in a major city under siege needs only the Donald Rumsfeld punch line of "Stuff happens" for a coup de grâce. How about shared sacrifice, so that this time we might get the job done right? After Mr. Bush's visit on "Good Morning America" on Thursday, Diane Sawyer reported on a postinterview conversation in which he said, "There won't have to be tax increases."

But on a second go-round, even the right isn't so easily fooled by this drill (with the reliable exception of Peggy Noonan, who found much reassurance in Mr. Bush's initial autopilot statement about the hurricane, with its laundry list of tarps and blankets). This time the fecklessness and deceit were all too familiar. They couldn't be obliterated by a bullhorn or by the inspiring initial post-9/11 national unity that bolstered the president until he betrayed it. This time the heartlessness beneath the surface of his actions was more pronounced.

You could almost see Mr. Bush's political base starting to crumble at its very epicenter, Fox News, by Thursday night. Even there it was impossible to ignore that the administration was no more successful at securing New Orleans than it had been at pacifying Falluja...

Aside from the storm brewing among the voters, there is also trouble brewing for the more lucrative financial engines of the Ownership Society:

OF all the sectors of the financial universe, the hedge fund world is probably the most secretive and almost certainly the most alluring. Open only to institutions and the wealthy, hedge funds offer sophisticated models of risk, access to the best financial minds and the chance for outsized returns. According to Van Hedge Advisors, hedge fund assets have topped a trillion dollars...

Andrew W. Lo, a finance professor at the Sloan School of Management at the Massachusetts Institute of Technology, has been studying hedge fund failures and risks, and he says that another hedge fund industry shakeout is likely in the near future. Mr. Lo runs a company, AlphaSimplex, that manages a $400 million hedge fund - so he is not looking for a reason to say hedge funds are in trouble. But that is exactly what he's saying, backing it up with powerful data and a couple of unexpected theories...

Traditionally, economists have thought that big up-and-down fluctuations in returns indicated risky investments, so many hedge fund investors have hoped to see a pattern of smooth and even returns. But Mr. Lo quickly saw that lots of hedge funds were posting returns that were just too smooth to be realistic. Digging deeper, he found that funds with hard-to-appraise, illiquid investments - like real estate or esoteric interest rate swaps - showed returns that were particularly even. In those cases, he concluded, managers had no way to measure their fluctuations, and simply assumed that their value was going up steadily. The problem, unfortunately, is that those are exactly the kinds of investments that can be subject to big losses in a crisis. In 1998, investors retreated en masse from such investments.

Now, in a paper to be published by the University of Chicago, Mr. Lo, working with his graduate students, has come to a disturbing conclusion: that smooth returns, far from proving that hedge funds are safe, may be a warning sign for the industry. (The paper is at http://web.mit.edu/alo/www/Papers/systemic2.pdf.)

...By Mr. Lo's measures, hedge fund investments are less liquid now than they have been in 20 years. His work shows that the same pattern of investing preceded the 1998 global hedge fund meltdown and the 1987 stock market crash...

So even some of the University of Chicago boys are saying the center will not hold?

Looks like there's a Storm coming.